The Regulatory Balancing Act: Cross-Border E-commerce for Unapproved Drugs in China

The Regulatory Balancing Act: Cross-Border E-commerce for Unapproved Drugs in China

The "Cross-Border E-commerce Retail Import" model allows consumers in China to purchase goods, including overseas drugs not yet approved domestically, through third-party platforms via two customs channels: Bonded Warehouse Import or Direct Purchase Import. This emerging practice presents a critical regulatory challenge: balancing the public's need for access to global pharmaceuticals with the imperative for drug safety.

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The Two Import Channels

Currently, the method of customs clearance determines the feasibility of importing unlisted drugs:

• 1. Bonded Warehouse Import (网购保税进口): Goods are shipped in batches to a bonded zone first. After a consumer places an order, the goods clear customs rapidly and are shipped. This model offers high efficiency and tax benefits but is restricted to the Cross-Border E-commerce Retail Import List. Since unlisted drugs are currently not on this list, this channel cannot be used.
• 2. Direct Purchase Import (直购进口): The consumer orders the goods, which are shipped directly from overseas via express mail/post. This method is slower and is typically classified as a personal postal purchase, bypassing the stringent requirements of the approved list. This is the only viable channel for consumers to currently acquire unlisted overseas drugs legally via e-commerce.

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Inherent Risks of Direct Purchase Import for Drugs

The Direct Purchase model, while providing accessibility, operates outside the established regulatory requirements for drug marketing and sales in China. This introduces significant drug safety hazards:

• Uncertain Quality: The source and quality of the drug cannot be guaranteed through this decentralized channel.
• Lack of Guidance: Absence of professional guidance for drug use, potentially leading to improper dosage or contraindications, especially since the drugs lack Chinese labels as required for domestically approved pharmaceuticals.
• Difficult Consumer Rights Protection: Recourse for consumers in case of quality issues or harm is extremely difficult due to the direct buyer-seller relationship with an overseas entity.

Furthermore, the single-order clearance nature of Direct Purchase Import makes systematic, large-scale safety supervision difficult compared to the batch clearance and platform-level accountability of the Bonded Warehouse model.

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Regulatory Strategy: 'Guiding' through Pilot Programs

Regulators have acknowledged the risks but recognize the genuine public demand for specialized overseas drugs. Instead of an outright ban, the strategy is one of "guidance" (疏不如引) through controlled innovation:

• Risk Control: The State Council and local authorities have launched Cross-Border E-commerce Retail Import Drug Pilot Programs in areas like Henan Province (State Council approval) and Beijing (local plan).
• Objective: These pilots explore how to reasonably and safely meet public demand for overseas drugs while building robust regulatory experience.

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Shifting Towards Enhanced Quality Control

Pilot programs are designed to mitigate the risks inherent in the Direct Purchase model:

• Transition to Bonded Import: The Beijing Pilot plan, by requiring pilot enterprises to have storage capacity that meets pharmaceutical standards in the TianZhu Comprehensive Bonded Zone, signals a clear regulatory intent to gradually transition drug retail away from scattered Direct Purchase towards controlled Bonded Warehouse Import.
• Platform Accountability: Pilot schemes mandate that platform enterprises establish comprehensive Quality Assurance Systems, Risk Prevention Systems, and Pre/Post-Sale Service Systems. They require full traceability ("One Item, One Code, Code-Sync Traceability"), effectively applying circulation quality standards similar to those for domestic drugs.

This approach aligns with China's Drug Administration Law, which governs drug activities within China's territory and aims for a balance between risk management, total-process control, and ensuring drug safety, efficacy, and accessibility for its citizens. By strictly regulating the pilot platforms, the government indirectly controls the safety risks associated with cross-border drug retail.